Selling pressure due to lack of buyers

Auto industry has been going through one of its worst periods in the last decade. Commercial vehicle growth there is a negative growth of 25% for the second successive year and the passenger car sales is just at the breakeven level as compared to last year. The automotive sector has been under tremendous pressure, with passenger vehicle sales declining 5% during the April-October 2013. US based auto maker Ford Motor is looking to make India its global manufacturing hub for small cars.

GDP had come down from 17% a few years ago to 14.6% at present, while the dream was to make manufacturing account for 25% of GDP by 2025. India's GDP growth rate in the quarter ended September 2013 is likely to be around 4.5%, compared to 4.4% growth registered in April-June quarter of 2013-14. World Bank President Jim Young Kim has said India was expected to have a good third quarter, which is in line with Finance Minister P Chidambaram's observations that the country's economy is now picking up.

Even a Rupee difference makes a substantial cost difference to the ultimate cost management of the product. So, the buyers continuously keep watching the markets both international and domestic and take appropriate decision at that point of time whether domestic rubber purchase is better or international rubber purchase. Absence of buyer from consuming sector and weak closing in the domestic futures market kept spot rubber market under pressure. Selling pressure from dealers and growers were visible, who fear further decline in prices is possible.

RSS4 grade closed at `.154 a kg at Kottayam, while National Multi Commodity Exchange December futures closed at `.153.83 a kg, January 2014 at `.155.70, February at `.158.20 and March 2014 at `.160 a kg. RSS3 grade closed at `.156.49 a kg at Bangkok and Malaysian SMR20 closed at `.144.87 a kg. While Tokyo Commodity Exchange, November futures series closed at ¥250 a kg, December at ¥252.8, January 2014 at ¥254, February at ¥256, March at ¥258.2 and the contract for delivery in April 2014 at ¥260 a kg.

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Read lot more in Rubber4U – 1st December 2013 issue